Email Marketing: Warm Lists vs. Cold Lists and GDPR

A couple of people have said to me recently that they thought Email marketing felt like a relic of the past compared to social media. I would like to de-bunk this misconception.

Email marketing has endured the test of time and remains one of the most cost-effective channels for customer engagement and return on Investment (ROI). There is a great deal to be gained with a well-crafted email campaign, it can give your business a competitive edge.

The Effectiveness of Email Marketing

Did you know that, according to *DMA, for every ￡1 spent on email marketing, the average ROI is around ￡42? That’s a staggering rate of return. But why is email so effective?

Personalisation: Email allows you to customise messages for different customer segments, thereby increasing the likelihood of conversions. What does that actually mean? It enables you to send out relevant content to sections of your list so that recipient receives information that is of specific interest to them.?

Personalisation also includes being able to address the recipient by their name, making the correspondence more intimate. A correctly worded email should read like a personal letter, not a message sent to hundreds of people. This is a common mistake.

Direct Communication: Unlike social media platforms where your posts may not even be seen by a large chunk of your followers, emails land directly in your subscribers' inboxes and stay there waiting to be discovered.

Data-driven: Advanced analytics give you actionable insights into customer behaviour, helping you to tailor future campaigns for maximum effectiveness.

Building a Warm List vs. Buying a Cold List

Warm List:

A warm list consists of people who have already interacted with your brand, such as past customers or individuals who have signed up for your newsletter. They are more likely to engage with your emails and promotions.

• Trust: Your subscribers have willingly given you their email address, making them more likely to engage with your content.
• Quality over Quantity: A smaller, more engaged audience often proves to be more valuable in the long run.

Cold List:

A cold list is made up of people who have had no prior interaction with your brand. These individuals haven't given you explicit permission to contact them, so they are less likely to engage with or even open your emails.

• Low Engagement: Cold lists are often disengaged, resulting in low open and click-through rates.
• Higher Costs: Acquiring a cold list can be expensive and usually provides a lower ROI.

Understanding GDPR?

The General Data Protection Regulation (GDPR) has been in effect since 2018 and has specific clauses that every UK business owner should be aware of:

1. Consent: You must obtain explicit consent from individuals before sending them emails.
2. Right to Access: Individuals have the right to access any data you hold on them.
3. Data Portability: Allows individuals to obtain and reuse their personal data.
4. Right to be Forgotten: Also known as Data Erasure, it entitles the data subject to have the data controller erase his/her personal data.

What This Means for Business Owners

1. Transparency: You must be transparent about how you're going to use people’s data.
2. Accountability: You are responsible for any data breaches and must report them within 72 hours.
3. Compliance: Non-compliance can result in hefty fines.

There are six legal bases under which personal data may be used that you should be aware of if you are using email marketing. While "consent" is one that is commonly cited in the context of marketing, it's important to note that marketing activities can potentially be justified under other legal bases as well.

Here are the six legal bases:

1. Consent: The data subject has given clear consent for their data to be processed for a specific purpose.

• Marketing Application: This is the most straightforward basis for email and other direct marketing methods. Users must explicitly opt-in (not just opt-out) to receiving marketing materials.

1. Contractual Necessity: Processing is necessary in order to enter into or perform a contract with the data subject.

• Marketing Application: If someone buys a product from your online store, you have a legitimate need to send them transactional emails related to their purchase. However, this doesn't extend to promotional materials unless explicitly agreed upon.

1. Legal Obligation: Processing is necessary for compliance with a legal obligation to which the data controller is subject.

• Marketing Application: This is less common for marketing but could apply if there is a legal requirement to provide certain information to customers or stakeholders.

1. Legitimate Interest: Processing is necessary for the purposes of the legitimate interests pursued by the data controller or a third party, except where such interests are overridden by the interests or fundamental rights and freedoms of the data subject.

• Marketing Application: You could argue that marketing activities serve a legitimate business interest. However, this should be balanced against the individual’s interests and rights. You must also allow people to opt-out easily.

5. Vital Interests: Processing is necessary to protect someone’s life.

• Marketing Application: This is rarely, if ever, applicable to marketing activities.

6. Public Task: Processing is necessary for an organisation to carry out an official function or task that is in the public interest.

• Marketing Application: Again, this is generally not applicable to private sector marketing activities but may be relevant for governmental or public service campaigns.

Implications for Business Owners in Marketing

Consent: Always aim to get clear, unambiguous consent for marketing activities.

Contractual Necessity: Be clear about what communications will be part of the contractual obligation and what falls under marketing to avoid confusion.

Legal Obligation: Ensure you understand any legal mandates related to your industry’s marketing practices.

Legitimate Interests: If relying on this make sure you can justify your marketing activities.

Opt-Out: Regardless of the legal basis you're relying on, always provide a clear and easily accessible way for people to opt out of marketing communications.

Transparency - Keep records demonstrating which legal basis you’re relying on for different types of processing activities.

Understanding these legal bases for data processing can help business owners develop a marketing strategy that not only meets GDPR requirements but also respects the privacy and preferences of their target audience.

Email marketing is not just a ‘nice-to-have’ but a ‘must-have’ as part of your marketing plan. By building a warm list and adhering to GDPR regulations, you're setting your business up for long-term success.

If you've yet to start using email marketing or are not doing it effectively, now is the time to start. Get in touch for a no-obligation call if you need any help or advice or if you would like to outsource your email marketing.

*DMA" stands for the Data & Marketing Association (formerly known as the Direct Marketing Association) an organisation that represents the interests of brands, tech companies, and data-driven marketers and advertisers. It's a community that provides guidelines, resources, and best practices for the data and marketing industries. The DMA conducts research and publishes reports that often include valuable metrics and insights, including those related to the return on investment (ROI) of different marketing channels like email marketing.

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